At a time when the U.S. trade sanctions aim to hamper China’s fabs from manufacturing cutting-edge logic and memory chips by restricting the supply of the latest fabrication equipment, materials, and tools, the news about Chinese chipmaker Yangtze Memory Technologies Corp. (YMTC) building new fabs comes with an element of surprise.

What makes it even more intriguing is the current memory chip crunch sparked by an unprecedented demand in what pundits call the golden era of AI infrastructure. Will this window of opportunity bring YMTC to the league of Kioxia, Micron, Samsung, and SK Hynix? Industry analysts are closely watching this memory resurgence from China at a critical technology juncture.

And they wonder how a Chinese chipmaker is building new fabs while facing sanctions on the supply of the latest fabrication equipment from major international firms and churning out advanced NAND flash chips that compete with global heavyweights such as Kioxia and Samsung.

South Korean media outlet ChosunBiz has reported that YMTC is set to start mass production of cutting-edge NAND products at a new fab in Wuhan, Hubei province, in the second half of 2026. In addition to this new fab, known as Phase 3, YMTC plans to build two more fabs, each producing 100,000 wafers per month.

What has startled the industry watchers about YMTC’s upcoming fab, aiming to produce 50,000 wafers by 2027, is that more than 50% of Phase 3’s equipment, materials, and tools have been sourced from Chinese suppliers. That includes tools for vertical stacking of 3D NAND layers.

YMTC’s first two fabs, Phase 1 and Phase 2, were largely built around Western fabrication equipment before the 2022 U.S. restrictions, which halted access to lithography, etching, deposition, and cleaning processes from major suppliers such as ASML and Applied Materials. Since then, YMTC has been working closely with local suppliers like Advanced Micro-Fabrication Equipment (AMEC), a fabrication equipment company that offers etching and MOCVD equipment.

NAND flash underdog

YMTC, China’s first mass producer of 3D NAND flash memory chips, is now rapidly narrowing the gap with market leaders Kioxia, Micron, Samsung, and SK Hynix. In 2025, YMTC accounted for 11.8% of the $52 billion global NAND flash market, while market leader Samsung commanded ?30.4%. SK Hynix, Kioxia, and Micron held 16%, 15.9%, and 13.3%, respectively.

Earlier this year, YMTC unveiled the new Xtacking 4.0 memory chip design for its 3D NAND chips; it implements two separate dies for logic and memory array. That led to the creation of the 64L 3D NAND flash device, which represents the first major competitive semiconductor product from YMTC.

The Xtacking 4.0 architecture runs at 270 layers, behind SK Hynix’s 4D NAND flash at 321 layers and Samsung’s 9th-gen V-NAND at 286 layers. In Xtacking architecture, periphery circuits and memory cell operations are processed on a separate wafer. So, the array efficiency and memory bit density are considerably higher than conventional 3D NAND chips such as Samsung’s 64L V-NAND and Kioxia’s 64L BiCS NAND.

However, it’s important to note that YMTC’s NAND flash device consumption mainly comes from China’s smartphone, notebook, and server companies, which benefit from government subsidies for using local chips. Take the case of Acer, Adata, Lexar, and Team Group, which employ YMTC’s NAND flash chips in their SSDs and other storage devices.

Though, according to TechInsights, YMTC also offers a 10-20% price edge over Japanese, Korean, and U.S. rivals. “Chinese manufacturers often enjoy a price advantage of more than 15% for products of the same specifications,” said Arisa Liu, chief director and research fellow at Taiwan Industry Economics Services, a unit of the Taiwan Institute of Economic Research. “It’s highly attractive to the price-sensitive general-purpose server and consumer markets.”

Still, YMTC’s technological know-how and rapid strides in NAND flash are a testament to China’s pursuit of semiconductor self-sufficiency. While quality and security concerns continue to restrict memory adoption outside China, underdogs such as YMTC, offering price advantage paired with rising yields and more mature processes, could eventually shift procurement decisions in the global memory markets.

The DRAM push

Industry reports suggest that YMTC has decided to allocate around 50% of Phase 3’s capacity to DRAM rather than NAND. And that it’s working on through-silicon via (TSV)-based packaging for stacking DRAMs in high-bandwidth memory (HBM), widely used alongside AI accelerators.

There are also reports that YMTC has sent low-power double data rate (LPDDR) samples to clients and expects feedback by the end of the year. That, in turn, is likely to shape the DRAM production capacity that YMTC allocates across its new fabs.

It’s worth noting that ChangXin Memory Technologies (CXMT), the other major memory chipmaker in China, is already eying high-end DRAM technology for AI data centers. CXMT is shifting 20% of its DRAM capacity to HBM3 while it aims to complete HBM3 mass-production certification later this year. Next, HBM3E chips are expected to start shipping within two years.

The rise of two memory chipmakers in China despite U.S. trade sanctions marks a defining moment in China’s drive for self-sufficiency, as the global memory chip market faces dramatic shortages. More importantly, Chinese memory chipmakers are building new fabs while sourcing fabrication equipment, materials, and tools from local companies that offer lithography, etching, deposition, and cleaning processes.

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved